Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for September, 2011

Ever since Chavez became ill, rumors began suggesting that the Venezuelan Presidential elections were going to be earlier than they were supposed to be, in order to help Chavismo. Presidential elections have usually been in early December in Venezuela and the rumors had always been in that they would take place in March 2012, a full nine months before expectations. How this was supposed to help Chavez was never too clear for me. People suggested that by then Chavez would be elected and his “successor” would be the VP and if something happened to him the VP would take over…

Except that the law does not say that. The Constitution (Art. 233) says that if the President is not able to continue within the first four years of his Presidency, Presidential elections have to take place within thirty days. Thus, this would seem to go against Chavismo remaining in power, as if Chavez had no successor, imagine holding elections within thirty days of him being able to continue with an opposition candidate that recently ran against Chavez, against whomever Chavismo chooses within a very short period of time. (This Article is absurd anyway, the Constitution (Art. 67) also says that candidates have to be elected by in internal elections of the parties. Imagine the President dying or disabled and within thirty days holding primaries and then holding the Presidential election. Ridiculous!)

The only reason to hold the elections earlier that would favor Chavez, in my mind, would be to limit the continued deterioration of the country and his popularity. The argument that holding the election in March would hurt the opposition because its primaries would be in February did not have much credibility in my book, the opposition could easily hold them earlier.Time would be short, but I have always thought that time works against the opposition not in its favor, given the fact that it has limited financing compared to the essentially unlimited financing and resources of the Government for its candidate. Imagine months of a daily campaign by the Government media against a single opposition candidate.

But that there was something to the desire to hold the Presidential election earlier in time was proven by the fact that it will take place on October 7th., an unusual date historically, which is also problematic given that voting takes place in schools, with high schools scheduled to start (They wouldn’t!) a week earlier.

There was no explanation for the earlier date, the choice is a mystery in my mind. The only possible justification was that they wanted to hold the elections for President, Governors and Mayors on three separate dates. But why they would want to do that is also a mystery to me. I agree that they can not all be on the same date, too complicated, too many choices for voters. But it certainly seems to work against Chavismo to hold the Presidential and Gubernatorial elections. on different dates.

Let me explain:

Chavez can win or lose on October 7th. In either case, if Gubernatorial elections were held on the same day, he would carry the same number of Chavista candidates for Governor on his coattails. But if he loses, his followers will be on a disarray before the December elections and they will likely get fewer Governorships. If he wins, I don’t think it will increased dramatically the number of Governorships the Government Chavismo while Chavista ones depend on the funding and power from Caracas and the Big Man.

But there is more. By holding the Presidential elections in October and Governors separately in December, opposition Governors will continue to hold their jobs until that election and will campaign for the candidate (and use their treasuries!) for the campaign. If they had to run their own individual campaigns separately, the opposition would be more dispersed, less unified, as regional leaders would be thinking about themselves first, the MUD candidate second.

So, what gives?

I just don’t know. It is a mystery. In fact, the whole thing even seems logical, if you wanted to separate the three elections, this is what makes sense. Maybe you could have tweaked it to have the Presidential election the third week in September to interfere less with the school year. But this is just about right.

I still believe that the best scenario for Chavze, whether ill or well, was to have a long period between the opposition primary in February and the Presidential election. If he was well, more time to go around the country destroying his opponent. If he was ill, more time to recover from the eight to ten chemotherapy treatments he is certainly to have in total in the next few months and then capaign and destroy the opposition candidate. If he was gravely ill, more time would also allow him to anoint his successor and help him be liked as much as possible, by having lots of time. But shortening it? Just did not (and does not) seem to make much sense.

As far as I can tell, the only advantage of advancing the date, is that there will be more time between the Presidential election and the day the new President takes over. More time to burn documents, erase hard drives and get rid of the evidence.

I haven’t written much about the candidates for the simple reason that there are too many in my opinion and I don’t want to waste useless words on some of them. In the end I think there will only be two. But there seems to be something programmed in the DNA of some Venezuelan men that makes them want to run, even when they have been out of view for years and have become irrelevant politically.

Thus, kudos to Andres Velazquez and Causa R for announcing that they will back Henrique Capriles Radonski. Clearly, Velazquez was the clear leader of Causa R, but his day in the sun is past and his health limits his ambitions. He had a good run in 1993, but has been unable to win an election since, despite trying. He can bring a lot to the Capriles camp, few people know Guayana and the union movement like Velazquez. Velazquez must be impressed with Capriles’ ideas on the union movement to back him.

With the announcement I now know two Venezuelan men not running (Guess the other one!), let’s hope other would-be candidates take the hint, that if Velazquez is not running, they should not do it either…

I had a colleague, who will remain nameless, who left Venezuela almost three decades ago for a job in a multilateral organization. Years later, I found him again, working for a foundation. Miguel, he said, “I have the best job in the world, I read proposals from the best scientists in the world, I recommend to the Board the best ones, and they mostly go with my opinion.I basically decide how a few billion dollars are spent in the most exciting areas of of research in biology”

The story comes to mind, because according to the Fonden website, US$ 40 billion ( I have subtracted the missing US$ 29 billion or so) are decided by a “Directorio: (Board), composed of two people: Jorge Giordani and the Executive Secretary, someone named Claudia Garcia Guillen, whose CV is empty in the Fonden pages, and I have been unable to find much about her in google.com.

My friend would (or should) be envious!

Thus, mhewas wrong, there was a better job, imagine having the power or the ability to influence how million and billions of dollars are spent, even if you know little about the field, and steer Venezuela’s “development” with the money.

Except, that I am not sure about how these projects were approved. Was it Giordani who had the last word? Or was it Hugo himself? In the end, after reading all of the projects (I would take a test on my knowledge!) the whole thing makes little sense, when you look at the details of all the projects.

Let’s look at the biggest headache of Chavez Government in the last few years: The Electric problem. The root of all problems was Guri dam. The lack of maintenance forced the Government to stop almost half the turbines. This meant halting almost 50% of the main contributor to the country’s power generator. But, as you can see in row 113 of the spreadsheet, a scant US$ 64 milliom was assigned to this problem.

What gives?

There are 300-plus projects and this one does not even rate being in the top 80. They spent over 500 million dollars in at least 12 projects, US$ 100 million in at least 65 projects and Guri, barely got US$ 64 million.

But then, if you are distributing money right and left in the millions, why do you even bother to write down, consider or even give US$ 2,783 to overhauling the “Recrational Los Lagos El Encanto” Park (row 28). For God’s sake, give them US$ 3,000 out of petty cash and don’t even ask for receipts!

Remember, Fonden was supposed to be spent in foreign currency. All dollars. But you have things like liquidating INAM (row 134), the National Institute for Minors, which I am sure only required local currency.

But there are many like that. Take row 139, US$ 33 million to indemnify people who lost their homes in Lake Valencia, you certainly can’t justify paying them in foreign currency, no?

Or row 274, US$ 74 million to buy homes in the “secondary market” for those that lost their homes in the floods in Caracas. Did these people really get paid in US$ dollars. If not, how did Fonden exchange the money. Did they go to the central Bank and say: “Hey, remember the dollars you used to create Bolivars when PDVSA gave them to you and then you gave to me? Well, I want Bolivars for them now. Get it? If they did that, it would be giving someone Bolivars twice for the same dollars! Talk about being irresponsible!

How about row 230? 42 million dollars to build housing in the city of Caracas. Sounds good, no? Except the organization in charge of execution of the project is none other than the Ministry of Culture.

Hello! I know the Minister of Culture was an architect, but what does culture have to do with building housing?

I could go on and on, like 100 plus million on building ten new universities (Really, how crummy can they be?). Or the Metrocaribe Mariche, which received US$ 49 million (row 119), but can anyone near Mariche tell me if anything has been built? Or all the money invested in agriculture, what happened to it?

The point is that Fonden has been like a petty cash fund on steroids, used without planning, even random in topics and amounts. It is as if the revolution has no priorities, just throw money at stuff, hope something works.

But nothing seems to work.

And it all goes back to the same man, Jorge Giordani, the non-economist, obscure academic in charge of the economy for ten of the last twelve years. In charge of continued and soaring inflation. In charge of this boondoggle of a development fund, called Fonden, where money has been misspent, wasted, some US$ 29 billion somehow missing, and where the word “result”, “priority”, “evaluation” and the like seem to be absent from consideration.

And thus, I promise with this musing (or rant!) I will stop writing about Fonden unless new information becomes available. It should be a scandal, it should be a source of outrage. It is for me. We are talking US$ 25,000 for each person in Venezuela, spent without impact, without control and without accountability. To say nothing of how much of this money has been sent to Cuba.

You have to love that coming from former guerrilla commander “Faust”, who spent thirty years shooting people and was apparently the last guerrilla member to give up in 1983, years after the guerrilla movement was dead in Venezuela.

Yes Ali, after twelve years this seems “logical”, but logic is not Hugo’s Government’s strength, irrationality seems more like it. It was him that stopped the last scheduled gasoline price increase under Caldera in 1998 and froze Electric rates 8 years ago. Thus, he will keep gasoline and electricity prices where they are until he leaves, whether in 2012 or 2030. That’s his logic!

And speaking of price increases, user of Movistar complained about the company’s rate increases and Indepabis quickly responded freezing the company’s rates and starting an investigation and sanctioning them. Well, with 30% inflation and the fact that the company does not receive as much foreign currency as Movilnet and now no price increase, then users should get ready to have deteriorating service. In Movilnet, that is guaranteed due to the lack of investment, nothing like insuring your future is bleak due to stupidity! (Disclosure: I am not a Movistar subscriber!)

As I noted in the next to last post, there is now more information on the website of Fonden on the details of the projects funded. After spending a day looking at “tools” that would allow me to manipulate the data, I gave up. So, I began doing the task by brute force, I went to “Todos Los Proyectos” above and copied project by project into an Excel spreadsheet, hoping to find some of the “missing” US$ 29 billion or so. You can find the Excel spreadsheet here.

The quick conclusion?

All of the projects added up to September 6th. 2011 on the webpage of Fonden add up to only US$ 27.22 billion, far from the US$ 69 billion of the earlier report to the National Assembly.

US$ 38.158 billion, some US$ 30 billion short (Still!) of the US$ 69 billion the fund has received and the total provided by the Finance Ministry to the National Assembly.

Thus, all the work did not yield much, except that by doing it brute force, I read every single project in the website in detail and will have more to say about them later. For now, we still have some US$ 29 billion “Unaccounted for” based on the information provided to the National Assembly, as well as combining the projects in the Fonden website on Sept. 6th. 2011 plus those missing from it in the report to the Assembly.

Thus yesterday, the Vice-Minister for Foreign Relations said this was false, despite the press conference in Gambia by the guy in charge of electrification in that country. My friend @Naldoxx contacted me yesterday and showed me documents (part of which has since been published by la patilla!) of which you can see the portion of the funding above. In no uncertain terms, it says that Venezuela’s Bandes has lent that country the money for the project.

Thus, in terms of half truths, the Vice Minister is right, Bandes lent the money to the Gambian Government, it is not a gift, just a loan, but in the end, I suspect it is the same, somehow Venezuela does not collect in most of these loans, least of all from Gambia, a country that will likely have to roll over the loan over and over.

So, it is false Venezuela gave Gambia the money, it was Bandes, and it was a loan, not a gift, OK?

In a very interesting development, all of a sudden there seems to be a rush to have information about Fonden out in the open. For example, after the public absence of any financial statements from the fund since 2007, as if by magic, you can now find 2009 and 2010, as seen below here:

Notice however, that in the rush to complete the information, they somehow either missed or did not have the Financials for 2008, and the information jumps from 2007 to 2009. Two weeks ago, all that was available was up to the 2007 financials. Clearly, there is an attempt, probably in reaction to Deputy Ramos’ accusations, to add information and then say it was there all along. Pity I did not save a picture two weeks ago, but there is more..

Another “new” feature is that what used to be a list of projects without any content, now has a full description of each project, who is executing it, like for example, this rice project:

Where you now can see the information of how much was given to whom, who is executing the project, how much has been disbursed. The contractor is not named, just the Government organization that is in charge of execution. But this is the type of information that was not available before and now “magically” is on the web page.

For example, in this page you find a list of institutions “executing” projects:

Curious about seeing a list of projects executed by the Fondo Nacional de Ciencia Tecnologia e Innovacion, I clicked on it and despite the fact that I know there are projects in that area, there is no information:

So, either this is a comprehensive list of institutions or they are still upgrading the information. I suspect it is a combination of both.

While I have not studied the details, there are more than the 140 projects here than the list given by Minister Giordani to the National Assembly. That list seems to be a global list of projects, this list has the detailed information. More work to be done, help will be welcome!

Seems like there is an attempt to make the information public and claim it has been there all along and make Deputy Ramos look bad or make noise about it, but these pages will show at least the evidence of what happened in time.